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Documenting Uganda's E-commerce Journey

It’s encouraging to see a prospering e-commerce sector emerging in Uganda. It’s like seeing a caterpillar metamorphose into a beautifully coloured butterfly.

I laud the innovators and entrepreneurs for doing the painstaking grunt work.

We need to be aware though, that for every startup success story, there are millions, perhaps thousands for the case of Uganda, of startup failures whose demise remains unknown. This is especially because their founders hardly share a thing to what befell their startups.

Paying homage to where it started

Honestly, I can’t name an e-commerce site that disrupted the market as hard as Facebook in Uganda. With close to a million users, dedicated groups such as Trade Links Africa and Liquidation Africa boast of hundreds of thousands of members who continue to cut deals on the fly.

It’s a flea market of sorts and in most cases requires the trading parties to physically meet and exchange the goods.

Now, my good friend, hardcore developer, girl geek enthusiast and University of Cape Town Computer and Electrical Engineering alumnus previously wrote a piece about the current e-commerce opportunities in Uganda.

In fact, she even backed her analyses with statistical data. That spurred my interest on expanding on the topic by telling a story (stories) of how the local (Uganda) entrepreneurs are mitigating the enormous barriers in the market.

First Things First, Some Context

Setting base as an e-commerce platform is close to re-imagining the entire postal system. In Uganda, where the system is greatly broken, a lot is left to be desired.

The post offices are largely dispersed and their rates are quite high for an average user. Well, vis-a-vis the internet; the major activity of the post offices - transporting mail - was eschewed by its infamous foe, the world wide web. Now they are left at the mercy of bulky packages where all taxes are levied to account for their day-to-day cash flows.

Following a government legislation to loosen control in the communications sector, the Uganda Posts and Telecommunication Corporation (UPTC) was disbanded into four organisations, post office, communications commission, post bank and Uganda telecom.

As Wikipedia puts it more aptly, Posta Uganda was vested the powers of pricing both domestic and international mail.

A vulnerable position in my opinion.

Let’s talk about disruption

Arguably, the postal service in Uganda "went postal" upon brushing shoulders with its would be death, the internet. Needless to say, it’s still vital in the exchange of packages.

The allure of well-executed online businesses can affect the way we view post offices, because both e-commerce and the post office share common escrow business concepts.

If we seek only the next most beautiful e-commerce website all the time, this habit alone can drive us away from the major functional role; buying/selling as well as delivering goods. Moreover, post offices are linking the virtual transactions carried out online to the real world, for example you buy a product through Amazon and it’s shipped directly by the post office.

The delivery channel, the post office, is broken. Not only Uganda but most of Africa suffers from poor housing plans and pot-hole riddled roads making it difficult to locate customers exact address.

But...

There are so many variables involved.

Firstly, the ever rising levels of consumption are creating demand for products, where the products aren’t locally produced, they are imported.

The growing middle-income earners are savvy enough to shop online instead of braving incessant traffic. Deliveries are made through the painfully slow post office system but where an extra dime is given up for convenience, local and international courier services are used.

One particular startup isn’t banking on any of the aforementioned delivery channels. You would need to wear Jeff Bezos’ dreaming cap to fully internalize this.

As explained in this post, forget about the Amazon’s cool project called Prime Air where small packages of not more than 3 kilograms are delivered in less than 30 minutes to their respective destinations by use of drones, think local.

Hello Food Uganda, one of Rocket Internet’s startups, in partnership with Tugende are delivering food over orders made from your smartphone/laptop in record time by use of motorcycles, locally known as boda bodas.

These Boda Bodas are terribly well known for beating Kampala’s crazy jam and yes they will find your home address that’s “behind some mango tree, next to Mama Frank’s shop, besides the green gate” because of their strong local knowledge.

The approach used is empathetic, it solves problems, create opportunities, sparks innovation. Above all else, it bolsters the user experience.

Payments still a problem

When I learnt that PayPal had launched in Nigeria and 9 other countries, my heart broke. Uganda wasn’t anywhere in the list, not even in the payments’ processor’s foreseeable future plans.

A lot of people in Africa are getting into e-commerce. Sadly making one sell and gaining trust isn't easy. Also that sector is too crowded.

I know of great Uganda e-commerce sites that have prematurely died because potential customers had a daunting task to figure out how to pay for a service, instead of just clicking “Buy now”.

The mobile money gateways will remain closed to protect telcos much protected business models. Payment intermediary services such as Yo Payments from Uganda, JPesa, PesaPal from Kenya come with APIs which which can integrated with web apps, however, they suffer security and maintenance issues.

Well, e-commerce in Uganda isn’t as seamless as we would want it to be but the struggle to chisel it into the meticulous form is on, one innovator at a time.

I now know why Jeff Bezos called entrepreneurs, ninjas:

they set out to build the future (not just predict it) despite the obstacles.

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A media brand that produces content, podcasts, events and publications about Afrika's burgeoning science, technology and innovation sectors and how they affect culture, business and day to day life on the continent.